QBE says higher-than-expected claims in the emerging markets business will hit its half-year earnings, which are due to be announced on August 17.

The division’s combined operating ratio will blow out to 110% due to Latin American weather-related claims and adverse experience in legacy portfolios, plus higher claims from Asia.

It will add about 1% to QBE’s overall combined operating ratio, which has been revised upwards to 94.5-96%.

QBE previously projected its combined ratio would be 93.5%-95%.

“We are encouraged by the improvement in the combined operating ratio in Australia and New Zealand, as well as North America, while Europe continues to perform well,” Group CEO John Neal said.

“Nonetheless, heightened claims activity in our emerging markets division will increase the group’s interim and [full-year] combined operating ratio by about 1%.”

QBE made a net profit of $US844 million ($1.12 billion) last year and the combined operating ratio improved to 93.2% from 94.3%.

Analysts from Morgan Stanley estimate the 1% combined operating ratio downgrade is equivalent to a $US60 million ($79.57 million) impact on QBE’s earnings.